Krugaman argues that the Obama administration needs to be ready to use the platinum coin. Drum argues that this would be illegal. Lizardbreath correctly notes that Drum is wrong:

First, of course, he’s perfectly right that the platinum coin option is ridiculous and isn’t going to happen, much as I wish it would. But if it were attempted, I don’t think a court would stop it, and I’m sure that a court that did stop it would be acting unusually and for politically motivated reasons. Courts are expected to do what legislatures say, not what they mean: “legislative intent” can only be considered where there’s an ambiguity in the law. Even if what the legislature said is obviously not what they meant, courts are still expected to follow the letter of the statute. And the platinum coin statute isn’t ambiguous (unless there’s something in the wording I’m missing): the treasury can mint platinum coins, and they’re real money.

Right. Some things are true even though Antonin Scalia believes them, and “we’re bound by the language of statutes legislatures enact, not by what legislators subjectively intended” is one of those things. Legislative purpose and intent should of course be taken into account when resolving statutory ambiguities, but here there aren’t any ambiguities.

If one wants to argue that what matters is not just plain statutory meaning but norms, again I think this would favor the minting of the platinum coin. After all, it’s also a norm that Congress not use the debt limit to try to get policy concessions. And if Congress were to go through with the blackmail, the president would have to violate the law either way (on one hand, violating the debt limit; on the other hand, violating the 14th Amendment and the previous statutes ordering the president to spend appropriated money.) The platinum coin option is both entirely consistent with the law and would be the best political resolution of an impossible situation. Permitting this blackmail to be a permanent feature of the American political system would be the worst option of all.

You know, a few months back, the call to mint the coin was basically some economist’s playful daydreaming plus a crank or two at Corrente. The fact that the Very Serious Kevin Drum is now assuring us Very Seriously that it is not a Serious solution suggests to me that the window has shifted rather dramatically. First they ignore you, etc.

I know Drum isn’t very popular around here for some reason, but I’m pretty sure that he’d change his tune real, real fast if we actually face a government shutdown.

You may disagree, but I sort of feel if given the choice between ‘President does something completely ridiculous that shouldn’t be legal, but is’ and ‘people don’t get unemployment, welfare, social security, or other basic services for months on end’ he will choose the former.

As would I. I think the platinum coin idea is ludicrous, but if the Republicans refuse to do a clean debt ceiling raise, I say pull the trigger. We live in crazy times.

I agree – the trillion dollar coin is a very silly, albeit lawful, solution to a problem that should not exist. But since no one in power seems willing to accept that Sec. 4 of the 14th Amendment actually exists, I’ll take it.

The problem is that there’s a big difference between “It’s legal but I’m very very very against it until our backs are against the wall” and “It’s LAWLESS (and I’ll be for it when our backs are against the wall)”.

I don’t see any grounds whatsoever for the charge of lawlessness. I don’t even think it’s particularly a matter of twisting the law. AFAICT, the plain meaning of the statute allows it. I don’t see any argument against that, certainly not in Drum’s post.

Sometimes he’s gets very caught up in a very stupid POV which he tries to insist is “procedural” or technocratic in some sense. That diatribe against the study of portion size and children comes to mind.

Right. The argument you have to make is that norms should trump the explicit language of the statute, and in the context of crackpots in a minority party threatening global economic collapse to win policy concessions, that’s insane.

Why does the Platinum Coin have to be platinum? It’s not like platinum is the most expensive element by weight. And the law change that purportedly brought this to the forefront didn’t indicate that only platinum coins could now be minted.

The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.

The face amount of obligations issued under this chapter and the face amount of obligations whose principal and interest are guaranteed by the United States Government (except guaranteed obligations held by the Secretary of the Treasury) may not be more than $14,294,000,000,000, outstanding at one time, subject to changes periodically made in that amount as provided by law through the congressional budget process described in Rule XLIX of the Rules of the House of Representatives or as provided by section 3101A or otherwise.

How does a $1 trillion platinum coin avoid this? Isn’t it an obligation with a face amount of $1 trillion? Don’t exactly understand how this idea is supposed to work.

Because as I understand it the Fed would have to make that move independently. But the Secretary of the Treasury, serving at the pleasure of the president, can mint platinum, and only platinum, coins of any denomination to his heart’s content.

It’s the ‘any denomination’ and ‘Secretary of the President’ parts that are important.

Denominations of bills and suchly are decided by statute. The Fed can’t unilaterally come up with a trillion dollar bill and print it, even if they were inclined to try and rescue the nation from the mess the Republicans have put it into.

But the Secretary of the Treasury could decide a relatively small amount of platinum is worth big bucks and get it made at an engravers over the weekend.

(This, by the way, is completely absurd. But this is the world we live in now.)

But that’s a separate question, isn’t it? Theoretically we could accomplish the same by printing up a bunch of hundred-dollar bills, but Dave wants to know why we’re talking about the platinum option instead. I’m not sure, but I think printing up a bunch of cash-as-we-know-it is out of the president’s and secretary’s hands.

If the hundred-dollar bills were used the same way that the trillion dollar coin is proposed to be used – if they were physically brought to the Fed building and placed in the Treasury Department’s account – would that be more inflationary than using the coin?

When the government creates a coin and declares it to have a value, it increases the money supply by that value.

If the government prints a sheet of 100 $100 bills, the money supply just increased by $10,000 – no matter what else is happening with the debt ceiling, or anything else. The government is, literally, putting that much more money into the economy.

The platinum coin would work by having the Fed deposit that coin in the Treasury, thus giving them the ability to fully meet all their obligations. It isn’t debt so it doesn’t count towards the debt limit and has basically the same effect as if the debt limit were ignored.

This analogy kind of brought it all together for me, so thank you.
Although mechanically, am I right in thinking it’s a little more like: I deposit the $100 cash in my checking account, and write a check for my shirts, leaving the credit card in my wallet?

ahh. if I had a nickel (or better yet, a platinum coin) for every argument I’ve had with others (including other lawyers) about the fact that just because something is “reasonable” or “logical” doesn’t mean that’s what the actual law says…

Yes and that’s the benefit on doing the platinum coin over the 14th Amendment option – you’re not messing with Congress’ statutory right to set the debt ceiling. The debt ceiling remains in effect and at the same level; we’re just a trillion dollars further away from hitting it.

They’ve already swallowed what little judicial pride they ever owned over the ‘offer valid one time only’ clause in Bush vs Gore. On this topic in particular, the last thing I think they’ll fear is doing it again.

And, it would take several weeks to get there. Presumably, since the end of the continuing resolutions in less than a month after the debt ceiling, the Republicans can throw their bitch-fit over the end of the CR’s

I’m not really comfortable with the idea that the Executive Branch may have even more powers, but I understand why all the talk about it. I’d threaten to mint it, with the idea to agree to eliminate the “debt ceiling” for good.

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.

How is this plain? How does it authorize the president to, against 220 (or 145, I suppose) years of precedent, issue debt on his own behalf?

And I don’t see how it comes into effect at all so long as interest on the existing debt continues to be paid with tax revenues, which I assume would be possible even after we reach the debt limit so long as interest payments are given top priority, which I believe Obama has already said is his understanding of his responsibilities.

It’s a little strong to say that legislative intent is applicable only in the case of ambiguity. There have been plenty of times where Congress has obviously screwed up the language of the statute and the courts will read it as what Congress intended, not what was actually stated. But I agree that’s a different case from the platinum coin issue, where it’s more a question of explicit, nonerroneous authorizing language being used in a way not originally contemplated. There, the statutory language has to govern.

True, but if the statute is unambiguous the Courts look to intent only if the plain reading of the statute would result in an illogical or ridiculous result, or one contrary to the purpose of the statute. Like if you passed a law to stop Obama from printing a Platinum coin, but forgot to put “stop” in the statute, the courts would look to the legislative history to see that it was really meant to do the opposite of what it says.

Minting a $1 Trillion coin isn’t illogical or ridiculous given the legislative intent, or contrary to the purpose of the statute. It’s not quite what they intended, but minting a trillion $1 coins would be fine, so what’s wrong with a single $1 trillion coin? Besides the Obama doing it part, of course.

Just to strengthen this a bit, if we had a long period of hyperinflation so that $1 Trillion was about enough to buy a cup of coffee…would anyone thing that minting a platinum coin in that denomination would be a problem at all?

I can’t imagine that’d be so. The only reason anyone has any qualm about $1 Trillion is that it short circuits the stupid debt ceiling (which is stupid and very dubious) and is real money. Neither has anything to do with the intent of the law.

As it happens, I read Daniel Foster’s NRO piece on this topic about ten minutes before this. He cites Mike Castle’s “Durr, I never thought of that when I wrote the law” frowning as legally authoritative and makes the rote BUT INFLATION! objection with the classic “This is sorely misguided” National Review condescension. But he does use the word “numismatizing,” so, you know, Buckley.

But this is the really annoying shit:

I doubt there is a Republican on the House side of the Capitol who is kept awake nights fretting over how bad it will be for the party if the president puts twelve zeros on a fancy nickel and uses it to pay for green-energy subsidies. If the president minted The Coin, it might win him a few cheers from the same folks on the professional left who have called him a wuss for four years. But it would convince just about everybody else that he’s back on the Choom Gang.

Has National Review always featured the clanging attempts at schoolyard-style humor, or do the all young bucks just think Jonah Goldberg’s the cat’s ass?

I mean, that phrase is only slightly more outdated than the glancing reference to “Back on the Chain Gang” that doesn’t connect with anything else in the paragraph (other than perhaps filling his readers’ heads with a vision of Obama on a chain gang).

I have two problems with Drum’s analysis: First, he says the platinum coin is a ridiculous option. But how many other explicitly legal avenues are available to the President now that a plainly ridiculous situation has been imposed upon him for the second time in less than 18 months? Second, he’s awfully sanguine about the President’s ability to break the GOP over this issue, citing the power of politics and pubic opinion. I agree that the GOP will suffer if this plays out, but what if the prospect of default looms before the GOP feels damaged enough to give in?

Routine GOP destruction of prevailing norms is a sad fact of politics in modern America. Sometimes it forces the introduction of novel–and legal–remedies.

If you read down the ensuing debate, LB softens her stance somewhat because there is some ambiguity about bullion and proof. Bullion means the value of the coin has to be linked to its metal content, clearly not feasible here. Proof means it has to be a sample coin or coins with the intent to distribute a larger print run for collecting purposes, and while the Secretary could claim that’s what’s going on, when there’s clearly no intent for numismatic purposes it could be seen as a violation of the statute.

Proof means it has to be a sample coin or coins with the intent to distribute a larger print run for collecting purposes, and while the Secretary could claim that’s what’s going on, when there’s clearly no intent for numismatic purposes

Isn’t this easily solvable by actually printing the collectables later on?

I know I would seriously consider buying a collectable based on a five trillion dollar platinum coin.

Treasury issues them in a bunch of standard denominations, and then simply says, piously, that it will hand out the five trillion version as soon as some collector ponies up the dough.

But that’s the opposite – coins in which the component metal is worth much more than their face value. The metal in the trillion dollar coin would be worth much less than its face value. I don’t know if that’s dispositive or not, though.

First, in his earlier post Kevin linked to the Congressional Record with its account of the floor “debate”. The amendment was clearly presented as a minor technical thing intended to allow the Treasury to sell platinum coins in addition to gold and silver (and later the Treasury marketing guru boasted about how the US scooped up the platinum coin market even though we still lag in gold, so score a win for flexible Big Government, or something.)

However! The Treasury authority for silver and gold clearly requires the coin to be sold at its bullion value (plus a plausible mark-up for striking and admin costs). That is why no one is calling for a Trillion dollar silver coin.

With the platinum supplement (quoted in a comment above), Congress intended to add “yeah, and platinum, too” to Treasury’s authority. The Trillion Dollar question has an obvious answer to any court that spends ten seconds on legislative intent.

Finally, this ‘screw intent and make them read the damn words’ approach is probably not an approach liberals progressives want to endorse right now since there is a screaming drafting error in the Affordable Care Act – if we limit ourselves to the actual text, only participants in state-run exchanges can get subsidies; if the Feds create the exchange on behalf of the state, tough luck.

As to Congressional intent, who knows? Maybe this was an inducement to encourage states to get on board. Maybe there is some Federalism principle in play, as with block grants in Medicaid or welfare. Or maybe they screwed up, which is how Obama is playing it. From the Times:

” James F. Blumstein, a professor of constitutional and health law at Vanderbilt University, said the dispute over subsidies involved a serious legal issue.

“The language of the statute is explicit,” Mr. Blumstein said. “Subsidies accrue to people who obtain coverage through state-run exchanges. The I.R.S. tries to get around that by providing subsidies for all insurance exchanges. That interpretation will almost certainly be challenged by someone.”

…

Prof. Timothy S. Jost, an expert on health law at Washington and Lee University, said Congress had made “a drafting error” that should be obvious to anyone who understands the new health care law.

“There is no coherent policy reason why Congress would have refused premium tax credits to the citizens of states that end up with a federal exchange,” said Mr. Jost, who supports the law. ”

With the platinum supplement (quoted in a comment above), Congress intended to add “yeah, and platinum, too” to Treasury’s authority. The Trillion Dollar question has an obvious answer to any court that spends ten seconds on legislative intent.

Going to legislative intent is only appropriate when there’s ambiguity in the law.

There is no ambiguity here. Congress passed a very clear law. Was it the law they MEANT to pass? It was not. So what? If Congress wants to change it they have that power.

Finally, this ‘screw intent and make them read the damn words’ approach is probably not an approach liberals progressives want to endorse right now since there is a screaming drafting error in the Affordable Care Act – if we limit ourselves to the actual text, only participants in state-run exchanges can get subsidies; if the Feds create the exchange on behalf of the state, tough luck.

This is a legitimate concern. However, permit me to offer a question.

If the Republicans absolutely refuse to move on the debt limit and make it clear they’re willing to tolerate an indefinite shutdown, which would you prefer? The platinum coin option, or the nothing option?

Because I know which one I want. Even if it bites the ACA in the ass later, I think it puts the country in a better state than it does otherwise.

To be clear, under ordinary circumstances I would find the idea of the platinum coin ridiculous and borderline lawless. That’s not the case here. Obama isn’t trying to run the Executive Branch as some kind of rogue operator, printing up platinum coins and dropping them from blimps to see what happens. He’s trying to pay the bills. Availing himself of a last resort option would be entirely acceptable.

I also think, given Obamas temperament and preferences, it WILL be an option of last resort. We will probably actually have to get TO a shutdown before he uses it, if he uses it at all; he may decide gutting out a shutdown or caving in is a better response.

There is no ambiguity here. Congress passed a very clear law. Was it the law they MEANT to pass? It was not. So what? If Congress wants to change it they have that power.

Really really this.

I’m pretty surprised at all that “IT’S A POWER GRAB” lines being thrown around. It’s a law passed by congress. It’s a straightforward application of the law (afaict). Congress can repeal it at any time whatsoever. They’ve known about this possibility for a while now!

Aaaaaand here’s an example of when courts look to intent regardless of ambiguity.

Does the statute function as intended, if it is applied literally? No. No, if it is read literally the exchanges fall apart, the health care act falls apart, the world turns into chaos. It’ll be the apocalypse. A plague o’ locusts o’er the land. Dogs and cats living together.

Unlike with the Platinum Coin. If the Treasury mints a $1 Trillion coin, does whole scheme for minting coins fall apart? Do commemorative coins disappear into the dust, never to be seen again? No. No, in fact it’s unclear that Congress didn’t intend for the Treasury to mint a $1 Trillion Platinum coin so all the dot com billionaires would have something to really lord over the peons.

The amendment was clearly presented as a minor technical thing intended to allow the Treasury to sell platinum coins in addition to gold and silver (and later the Treasury marketing guru boasted about how the US scooped up the platinum coin market even though we still lag in gold, so score a win for flexible Big Government, or something.)

Again, that’s nice, but the executive branch is bound by the language of the statute that Congress passed (not by congressional debates) unless it produces an absurd result. Here, the platinum coin would actually be the least absurd result.

I disagree. That was a stupid post. He concludes by saying that the executive won’t mint the coin because it would damage our international reputation. As if suspending debt or other payment obligations would not have the same effect to an even greater degree. And the whole argument that this represents a massive disruption to the balance of powers is even more asinine. Where did he even get that argument?

My view is that the biggest problem with minting a platinum coin is in the potential ensuing legal battles. It represents macro economic risk and a potentially damaging confrontation between the executive and judiciary.

If I were Obama I would probably let the treasury run through the debt ceiling by suspending payments selectively (not on debt) for a couple weeks and then mint the coin. At that point the economic damage for not issuing the coin would exceed the political fallout risk. And if the economy were to start crashing earlier, I’d mint the coin earlier.

I prefer a more straight forward argument. The President has an obligation that the laws be faithfully executed. He thus has an obligation that money be spend that has been legitimately appropriated. If doing so forces us to borrow money over the debt limit that is Congress’ problem not the Presidents. Put differently, the President has to choose between contradictory instructions. Assuming that someone has standing let the courts argue the contradictions out.

You make both arguments. We are using the platinum coin because otherwise, a violation of the constitution is unavoidable–either the president doesn’t spend the money appropriated by congress or the debt of the US gets dishonored. If it seems like we’re giving a ridiculous construction to the platinum coin statute, well, that’s because the Congress created this ridiculous situation.

This is just where I can’t go with the proponents of the coin. Congress, in its appropriations bills, tells the President to spend x$ on this and y$ on that if there is money available in the Treasury to do so. For the President to stop spending when the Treasury runs dry does not, it seems to me, contravene any Congressional command or run afoul of the Take Care Clause.

The 1974 Impoundment Control Act suggests that Congress does not want the President to have control over whether funds allocated for a given program are spent. I don’t believe that your words in italics are established anywhere in US law.

This. There’s nothing to the effect that Glenn is saying in appropriations laws and I assume not in anything like the Social Security Act etc. But the Impoundment Control Act is pretty clear that the executive can’t fuck with already appropriated funds.

The only question, as far as I see it, is whether “budget authority” (as used in the Impoundment Control Act) is construed to be limited by the debt ceiling. I’m not a lawyer, but I can’t find any reason to believe it is.

What we do know is that there’s no established procedure or law covering what happens when the Executive does not have funds to fulfill obligations.

Are you saying that, in the absence of a debt limit increase, the president can just decide what to spend money on and what not to? Isn’t that a much bigger violation of separation of powers than the platinum coin?

Hell, the Secretary of the Treasury could probably take a Dremel to a blank platinum disk and produce a messy scrawl. Geithner gets to decide the design, after all. Pick a design that doesn’t require a mold or negative or whatever.

I think the coin makes an ideal threat. Using it would probably cause desirable inflation which has been eluding us for the last 5 years. Republicans oppose that inflation. If they want to avoid it, all they have to do is cave.

Corporate bonds are theoretically backed by a financial asset(land, equipment, income stream). U.S. Treasuries are back by….nothing more than a promise to pay. This promise can be met any time without effort. It can create money at will.

The fed can put the bonds (issued by the Treasury) on its balance sheet and credit the federal government’s accounts. Then the government spends. Government bonds are a net asset to the private sector.

The effective money supply is currently smaller than the nominal money supply because so much of it is just sitting in vaults collecting extremely low interest. A small change in how the government handles its debt can change the decision making on what is done with a lot of that money.

I think this idea only works on the deliberate confusion of legal tender and credit line or security

1) If the platcoin is legal tender, The Fed can credit US Acc’t for 1 trillion on day one, on day two sell the coing to Japan and Japan on day three can try to redeem it for a trillion. Legal tender is exchangeable.

2) If the coin is not exchangeable and may not be sold by the Fed then it is not legal tender but security on a loan, a violation of the debt limit.

It would work if Treasury printed 1 million million-dollar-coins, or 1 billion thousand dollar coins and used these to pay their bills. If Boeing accepted them. But in that case the trillion would be put in circulation, and would be legal tender backed by the full faith and credit.

But depositing a dead cat at the Fed, calling it a trillion dollars, and then asking the Fed to pay my bills with it but not look at its exchange should get resistance from the Fed. Which is a bank, after all.

I have been googling, but have found little to nothing on the platcoin from the perspective of the Fed, which is a bank holding assets and accounts from member banks who may not want to take on a trillion dollar liability on a non-exchangeable unsecured assets. Granted, this will work if the Fed is cooperative, but I am not understanding why it is assumed that they would be.

Now the Fed can create a trillion dollars out of thin air, but can only do some very specific things with that trillion dollars, and buying fighter planes isn’t on the list. If they could simply credit the US account with a trillion, why do we need the platcoin? Because the Fed crediting would be a loan, and I think they would need security.

In any case, just consider this a question more than an argument. I would need to see a Fed Official or other expert like Tim Duy give their opinion before I accept the possibility.

When the Treasury issued debt instruments, it deposits them with the fed. However, with the debt limit in place, the Treasury cannot do this. They also cannot legally print a bunch of physical money and do the same thing (i.e., bonds must be issued by law to cover deficits). The coin is just a loophole to do the same thing….credit government accounts with the fed.

The whole point is this: The bonds are really not necessary in the slightest except for the fact that this is the way deficit spending is set up in a legal sense. In a fiscal sense either way is OK…doesn’t matter.

The Fed must accept legal government deposits. When you get your paycheck automatically credited to your bank account do you jump up and down holding your breath screaming bloody murder and demand “REAL” money?

In fact, the “1 million million-dollar coins” is a workable situation. In such case, the government could pay its dues in hard, cold cash. This is what legal tender means: anyone must accept such money as a payment of any debt or obligation.

A coin is not “backed by full faith and credit”. It is the physical money. The “full faith and credit” for bank notes essentially means that you can get your notes exchanged to coins.

I’m pretty sure that the intent here is your point # 1, but with the expectation that the Federal Reserve will never sell the coin, because (a) why would the Fed want or need to sell it and (b) who could plausibly afford to buy it? (Sure, there are a very small handful of countries that could hypothetically raise the funds to do it, but why would they want to hold a single coin worth one trillion U.S. dollars? They couldn’t spend it on anything other than purchases of dollar denominated debt, because nobody else has change for a $1 trillion coin.)

If the platcoin is legal tender, The Fed can credit US Acc’t for 1 trillion on day one, on day two sell the coing to Japan and Japan on day three can try to redeem it for a trillion. Legal tender is exchangeable.

… sell it to Japan for what?

Yen? I mean, I suppose. And then the next day they can try and sell the trillion dollar coin back to us for… the yen they just gave us?

This isn’t a trillion dollar BOND, dude. It would legal tender. It’s not DEBT. It’s CASH.

So the Fed sells the coin to Japan for a trillion dollars. Then Japan tires of their new trinket as it doesn’t involve schoolgirl panties, and tries to redeem it for a trillion dollars. In which case the Fed gives Japan back their Trillion dollars, and takes back the coin.

There’s no problem here, unless the Fed initially sells Japan the coin for less than $1 trillion dollars.

Well, normally, the BoJ sells dollars, rather than buys them, so probably not. Similarly, if you went to the BoJ with a stack of hundreds, and asked to sell them, BoJ would charge you a fee, since they are not required to buy dollars.

We would if Japan had just bought something from us for $1 trillion dollars. It’s not like the Fed would have to accept Yen in exchange for the coin. Let Japan worry about how to convert their assets into dollars in order to buy the coin.

And it’s not like the Fed’s balance sheet isn’t loaded with trillions in illiquid assets already.

We don’t have the trillion dollars. That is why we are printing the coin.

This applies to all fiat money. We make it when we need it.

in fact, it goes much further than this. You were aware that a large and growing amount of the worlds currency has no physical existence at all, yes? It exists as an electronic notation in someones account? If that’s real money, I don’t get why a physical coin, created legally under the laws of the US, wouldn’t be.

Is there any problem with depositing the platcoin at the BoJ instead of the Fed? Getting back, whatever exchange rate, 850 billion yen? Would the BoJ accept it? Can we ask them?

The Bank of Japan may not want a trillion U.S dollars at this time. They’re not legally obliged to accept money the Treasury wants to deposit or exchange.

If the point of depositing the “cash” at the Fed is that it will not and can not circulate, then I don’t know how you call it “cash.”

I did do a little research on the $100,000 bill, which are held by banks. They can be exchanged for $100 dollar bills at will.

They can be, but that’s not their point. The point of those hundred thousand dollar bills is not to circulate but to hang out representing a hundred grand in a small, convenient form.

I’m not sure why this is so hard for you to grasp. Back when we were on the gold standard, the government would routinely create huge bars of gold and put them in Fort Knox. They were legal tender, but their purpose was not to circulate; it was to hang out representing wealth.

Same deal with the trillion dollar platinum coin.

You are absolutely right that there would be practical problems if the trillion dollar coin were allowed to circulate. But since it won’t be allowed to circulate, what’s your precise objection? That it’s a bad idea?

Well, it is a bad idea. But you have to make a case that it is worse than the alternatives. Right at this moment, the alternatives are ‘extended government shutdown,’ ‘the government takes a dubious 14th amendment position and tries to keep issuing traditional debt that will only sell at an enormous risk premium,’ ‘Obama caves to the Republicans and grants them the insane concessions they want to keep the lights on,’ and ‘platinum coin.’

Yes. Those limits are determined by law. So the Fed would not need to accept a trillion dollar gold coin, for example.

A quintillion dollar coin? Googleplex coin?

When someone proposes this monumentally stupid course of action, we can debate the legality. The answer is probably that there are lots of monumentally stupid ideas that are legal, because nobody is stupid enough to ever seriously consider doing them.

Why would there be a limit in what the Fed has to accept unless there were, in fact, a limit set down in law?

I would think that this would be a frivolous lawsuit on the Fed’s part. What’s the harm to the Fed?

Is there anything that stops congress from creating an OMG infinity coin? And requiring the Fed to accept it as a deposit? And telling the executive, “Hey! This is the petty change…spend it as you see fit”?

Permitting this blackmail to be a permanent feature of the American political system would be the worst option of all.

Can’t argue with that. Hey, remember about six weeks ago when everybody was saying that the President held all the cards in the “Cliff” negotiations and needed to make few if any concessions? Whatever happened with that?

And can anybody make sense for me how negotiating the sequester and not negotiating the debt ceiling at the same time works?

The White House, like most of our govt is owned by investment banks and their interests and the White House decided going over the cliff and winning completely wasn’t worth the risk of a January 2nd market crash.

Hey Scott et al, I’m curious about the characterization of the platinum option as “the best political resolution” of this issue. I see why it’s probably legally defensible, but I really doubt it’s better politics/optics/whatever than trying some less redonkulous-sounding end run around the debt ceiling – if such an option is available and anywhere near as legally defensible as the coin.

I am pretty much assuming here that this all gets resolved through a deal, either before or shortly after Debt Cliff, so that taking a position that people get and think is responsible/not weird would be helpful in shaping that deal. I may be underestimating voters’ appetite for weird shit, or overestimating their influence on Congress.

I also just think Obama’s not going to set out another thing that can have his name slapped on as a prefix and sprayed across Fox News: Obamacoin? Has a ring to it.

(I was a little underwhelmed by Posner’s dismissal of the alternative options, but if they’re all legally doomed, well, coin it is, I suppose. But if simply ignoring the debt ceiling has, say, half the chance of surviving a legal challenge that the coin has, I’d go with the riskier but sure-to-be-more-popular option. Again, I’m kind of assuming this is all pretty temporary.)

“I am pretty much assuming here that this all gets resolved through a deal”

Now we must get ideological about the “best” outcome here. Any “deal” will be of course bad on its own terms, because Republicans will extract spending cuts in exchange for something they should absolutely do as a matter of their oaths of office, but further, it will make debt ceiling hostage taking a regular occurrence.

In an environment where no one really expects Democrats to retake the House before the next redistricting, are you really prepared to accept a decade of Republican defacto rule merely by holding the House of Representatives?

Why stop at fiscal demands, maybe they can start demanding abortion restrictions in exchange for debt ceiling raises, or war on Iran or whatever other lunacy. There’s no rules in Calvinball.

Yes. The GOP House is a chokepoint on expenditures and/or appropriations. However, they have chosen, for political reasons, to go through this debt hostage charade as opposed to actually laying out what it is they want to cut.

Why not pass the Ryan budget in gory detail with explicit appropriations for all affected government programs and tell the other two branches of government to stick it?

It strikes me the answer is obvious….they know it would be a dead loser politically. Maybe the Green Lantern just needs to smoke them out :)

I was lazy in saying “deal” – I meant “legislative solution of some sort”. That is, Congress will raise or eliminate the debt ceiling, with or without concessions from Obama, within a pretty short time of that becoming necessary – the Treasury will not be ignoring the debt ceiling or minting coins for very long. How much Obama gives up, if anything, is up in the air, but his political position with the public is, I think, stronger if the coin is not the first option. I’m sorry – I think it’s a hard sell.

Didn’t mean to sound like I was advocating a round of Let’s Make a Deal – just the opposite. But if Obama does end up negotiating stuff away (it would be foolish to assume he absolutely won’t, sadly), the optics of the Obamacoin also hurt his position.

That’s if public opinion matters, and if I’m not totally wrong about what people are going to think when they hear “trillion dollar platinum coin.”

It seems to me that, even if Obama doesn’t plan to do the platinum coin, it’s a very good idea for the Republicans to think he will. Because that would remove a whole lot of their leverage to force him to make concessions on stupid spending cuts.

If it were up to me, Obama would have one of his aides walking around with a chunk of nicely polished platinum, perhaps under a glass dome or on some sort of tasteful plinth. It would always be placed on the table whenever he sat down to meet with Boehner or McConnell. A respectful distance away, but in the room.

So, you’re a school kid. Your parents give you $50/week, for your textbooks and your lunches. One day you say: ‘textbooks and lunches are expensive, $50 is not enough, please give me more.’ They refuse, but they still insist that you manage to buy all the necessary textbooks and to feed yourself. Is it okay for you to get the money you need by selling your records collection?

People can call him a “Very Serious Person” or whatever kewl snarky name is in these days but Drum is imho (whatever that’s worth & it is much less than a platinum coin) right to think the idea is really stupid and even if it is technically legal, using such a hyper-literal application of the law is just not a good idea.

It also is not necessary here. Some time will pass before the matter comes to a head even if the debt ceiling isn’t risen at the deadline. It is unclear how literal the 14A requirement is (see Gerald M. at Balkinization) and if matters come to a head, I think Michael Dorf [who rightly notes that we shouldn’t go to Eric “give the President more power” Posner route] has a saner, reality community sort of answer

Drum is imho (whatever that’s worth & it is much less than a platinum coin) right to think the idea is really stupid and even if it is technically legal, using such a hyper-literal application of the law is just not a good idea.

Well, the first point to make is that Drum is claiming that such a move is “lawless”. Which is, to say the least, unsupported. The slightly weaker claim you’re making — that it relies on a hyper-literal reading — is equally unsupported. It’s going to require a lot of work to make the platinum coin option not authorized by the plain reading of the text (which is is why, of course, there’s all this appeal to intent). (And really, even though the intent was not to advert a debt limit fight catastrophe, the mere idea of generating income from platinum coins is exactly what the statute meant to do. As I wrote above, even denomination doesn’t really matter.)

What’s amazing about this is that Drum has long lamented the hack gap, but instead of closing the gap he’s hacking for the other side!

There’s no way, shape, or form that the coin option is sheerly lawless. I’m prepared to believe that there’s a reading which makes it illegal, but lots of seemingly reasonably things turn out to be forbidden. As for norm violation, the coin trick pales beside things like the debt ceiling hostage taking in the first place (or the mandate argument).

As for the power grab line, that’s sheer nonsense. The coin option doesn’t give Obama anything other than the power to pay for things congress has demanded he pay for. Seigniorage is a standard revenue source which Congress explicitly allows and explicitly allows in this case. Congress can wipe it out easily.

I remain baffled by the bafflement. No, it won’t cause inflation, it won’t allow Obama to buy anything he wants, and it can be undone as soon as new debt is authorized. So what? Like it or not, the debt ceiling is legal. Congress has the power of the purse. On the other hand, using a ridiculous loophole in a statute about commemorative and bullion coins in order to evade the debt limit isn’t legal. Seriously, folks: just forget it. I know I’ll never have to pay up on a bet over this since it will never be tested, but this would go against Obama 9-0 if it ever made it to the Supreme Court.

He got more incoherent. It’s a loophole, but it’s not legal. If it’s not legal, then it isn’t a loophole.

Now, it might well be the case that the Supreme Court would rule against Obama, but that would be far more lawless than minting the coin. I can’t imagine it would be 9-0. I have trouble imagining it would win if only because I do have some basic faith that there’s some level of hackery that this court wouldn’t do. (Scalia on the other hand…)

Kevin! Stop hacking for the Republicans!

(Again, it’s fine to insist that it isn’t a good move. Fine. But stop with the lawless crap. That is precisely the feverswamp hyperbole he claims to be opposing!)

The platinum coin option is both entirely consistent with the law and would be the best political resolution of an impossible situation.

That’s what brought the on-the-merits stuff in for me, at least – I see now that I probably read a lot into a little. I don’t think the “legal but suboptimal/last resort” thing was that clear in your original post, such that it was kind of easy to mistake your argument for the “let’s coin” sentiment that’s all over the place.

I’m confused as to what part of the let’s coin sentiment that’s all over the place is grounded in a positive liking of the option rather than last resort thinking. The only reason it’s on anyone’s table is because of the insanity.

Well, I’ll add in that I think it’s fine, per se. I mean, I don’t see any inherently horrible thing about it: If congress wants to control the money supply and cover debt by quirky seigniorage then I’ve no objections whatsoever. I even think it’s rather amusing and fun.

The only reason it’s the “best in a bad situation” is because the rest of the situation is so bad. (Ok, if you think that the Fed should have full control over the money supply, then the coin option has some downsides.) Obviously, the best case scenario is that there was never any hostage taking. It’s stupid that we have to do anything at all. But similarly, it’s really stupid to have to find cuts to offset disaster relief, etc. etc. The debt ceiling thing is really bad because of the spectacular catastrophe it entails.

I thought I was just conceding on the legality point. And on that, I will speak for Drum and say Uncle! (God knows if he’ll say so.) But if you want to talk about policy rhetoric…

I have to admit, the only explicit coin-firsters I’ve read are commenters. Make–wingnut-heads-explode types. As I said above, I probably misinterpreted Scott’s post as being proactively pro-Obamacoin rather than anti-Obamacoinsillegal.

Where I probably went wrong: I just haven’t heard much about the not-last resorts in this discussion. The resorts that don’t sound crazy to regular people! And that Obama might use. If the coin’s the only option besides default/shutdown, use it! (I still think it’s a political loser, sadly.)

I don’t want to fight – I think you’re right on the legality of the coin option, to the extent my opinion matters. But do you think it’s a political winner? Or even going to come to the table?

That’s all I’m saying – much respect, you tore up that last Drum thread :)

The resorts that don’t sound crazy to regular people! And that Obama might use. If the coin’s the only option besides default/shutdown, use it! (I still think it’s a political loser, sadly.)

The problem is that there really aren’t very many options and they all are generally hugely worse on the usual metrics than the coin. “14th amendement” solutions are contentious in a very different way and require doing something which is in kind new. Debt issued in defiance of the debt limit law is going to have a risk premium. The Treasury is already doing a ton of juggling to keep the cash flowing.

But do you think it’s a political winner? Or even going to come to the table?

I’ll be (pleasantly) surprised if it comes to the table.

Is it a political “winner”? Well, the upside is 1) not crashing the economy, 2) probably killing the debt ceiling, and 3) not giving anything up. What are the potential downsides? The Republicans will think Obama is…more illegitimate? They’ll be less likely to compromise? They’ll sweep the midterms? Very Serious People will cluck their tongues, but I suspect that if it were to happen and the terrorists had their guns taken away it’d seem pretty clever and funny.

And it will be all forgotten. If the Republicans try to run $1 Trillion coin ads…who’s going to care? Is it any more outlandish as what they already say?

And based on the details of the argument, apparently congress needs to provide extremely detailed guidance on everything that Republicans want to block. Did congress specify the color of food stamps? No! NO GUIDANCE AT ALL WHATSOEVER!!!

(c) The Secretary may prescribe the weight and the composition of copper and zinc in the alloy of the one-cent coin that the Secretary decides are appropriate when the Secretary decides that a different weight and alloy of copper and zinc are necessary to ensure an adequate supply of one-cent coins to meet the needs of the United States.

100 trillion pennies a couple of atoms wide would do the trick and still fit in your pocket!

[…] would be judicial overreach to an even more extreme degree. The job of the Court is to interpret the actual law, not to interpret the motivations or desires of those who made the law. Even those (like me) who […]